www.chinaccs.com.hk

2020 Interim Results26 Aug 2020

CHINA COMMUNICATIONS SERVICES CORPORATION LIMITED(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

Stock Code : 552

2

Management Present

CHAIRMAN MR. ZHANG ZHIYONG

PRESIDENT MR. SI FURONG

EXECUTIVE VICE PRESIDENT MR. LIANG SHIPING

EXECUTIVE VICE PRESIDENT & CFO MS. ZHANG XU

Agenda

Overview

Business Review

Financial Results

3

Overview

Highlights

5

COVID-19 brought unprecedented impact to the Company, operating resultsexperienced short-term fluctuation

Domestic non-operator market continued to be the main growth driver of overalldevelopment, contributed over 40% of total revenues for the first time withimproving development quality

The Company seized opportunities from 5G construction by domestic operators,cultivated and leveraged its edges in general contracting capabilities to consolidateits leading market position

As the pandemic stabilized domestically, the Company adopted multiple measuresthat facilitated a noticeable rebound of its operation in 2Q

The Company’s businesses and capabilities tally with the overall developmentdemand of New Infrastructure, new opportunities will further promote its high-quality and continuous development

Continuously increased R&D investment to upgrade software service capabilities,ACO business maintained robust growth and contributed approximately 15% of totalrevenues

6

The Pandemic Posed Short-term Impact on the Overall Results…

1H2019 1H20201H20181H2017

(RMB’M)

+10.4%+13.2%

-4.0%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

700

900

1,100

1,300

1,500

1,700

1,900

2,100

(RMB’M)

+7.3%

+8.6%

-7.2%

56,049 53,83450,792

44,888

1,712

1,5881,595

1,469

1H2019 1H20201H20181H2017

3.3% 3.1% 3.1% 2.9%

Net Profit Margin

Net ProfitRevenue

0

1,500

3,000

4,500

6,000

7,500

Jan Feb Mar Apr May Jun

7

… And Brought Unprecedented Challenges to the Company in the Beginning of 2020 …

0

1,500

3,000

4,500

6,000

7,500

Jan Feb Mar Apr May Jun

1H2020 Revenue Trend – By Businesses

(RMB’M)

1H2020 Revenue Trend – By Markets

(RMB’M)

Year-on-year Change in Revenue 1Q and 2Q 2020

-15.3%

+7.4%

Note: the above data was from the unaudited monthly financial statement of the Group

Domestic Non-operator

Overseas Customer

Domestic Operator

BPO ACOTIS

The pandemic significantly affected our normal operationin the first two months: affected the progresses of projectdevelopment and construction, delayed tendering, etc.;domestic operator and domestic non-operator markets aswell as various businesses showed downward trends

1Q2020 revenue decreased by 15.3% yoy

Adopted multiple measures to overcome challenges: as thepandemic stabilized while work and production resumed,2Q2020 revenue showed a noticeable rebound compared to1Q2020 and a recovering growth

2Q2020 revenue up by 7.4% yoy, which is better thanChina’s GDP growth in the same period (+3.2% yoy)

Q1 Q2

8

… The Pandemic Affected the Company’s Development in Various Aspects

Revenue Growth – By Markets

(RMB’M)

1H20201H2019

56,049

53,834(+3.7%) (+7.3%)

DomesticNon-operator

+786

Overseas

+98

1H2018

50,792

+10.4% -4.0%

Overseas-107

DomesticNon-operator

+4,669

DomesticOperator

+695(-7.4%)(+2.1%)

(+28.5%)

DomesticOperator

-3,099

(-9.2%)

Revenue Growth – By Businesses

(RMB’M)

1H20201H2019

56,049

53,834(+10.1%) (-6.4%)

ACO+718

BPO-1,169

1H2018

50,792

ACO+1,266

TIS+2,471

BPO+1,520

(+21.6%)(+9.2%)

(+8.7%)

TIS-1,764

(-5.7%)

+10.4% -4.0%

Impact of the pandemic: Though businessesrecovered quickly in 2Q2020, it could notfully mitigate the fall in 1Q2020; operationand development in 1H2020 were affectedin various degrees

Meanwhile, new traits and changes in ouroperation emerged: development in1H2020 was supported by the continuousinvestment in R&D and the development ofdigitalization construction businesses inrecent years, which generated sound results

• Domestic Non-operator Market: thefirst that resumed positive growth in1H2020 and contributed >40% oftotal revenues

• ACO Business: became the maingrowth driver in 1H2020, revenuerealized double-digit robust growthand contributed about 15% of totalrevenues

Fully Reflect the Company’s Organizational Capability, Convening Power, Leadership and Execution

9

Provided emergency communicationsupport for local governments,Huoshenshan Hospital and LeishenshanHospital in Wuhan, designated hospitals,module hospitals and other enterprisescombating at the frontline

Utilized centralized procurement,warehousing, logistics network andefficient organizational capability todistribute communications equipmentand supplies to infected areas

Leveraging Cloud, IoT, Big Data and otherfoundation platforms, swiftly developed andpromoted 40+ smart applications for pandemicprevention

Communications Facilities Construction

Supplies Distribution

Smart Applications

Caring about Employees

Donated masks and other pandemicprevention supplies to infected area, sentemployees to communities, medicalorganizations and other key areas tosupport pandemic prevention

Donation to Communities

Emphasizing life is of the utmostimportance: provided pandemicprevention supplies to employeesand arranged remote working

Precise Pandemic Prevention Big Data Platform

Pandemic Prevention Health Reporting Platform

Health Declaration and Enquiry System forMigrant Workers

“Fu Men” ( 福 門 ) Pandemic PreventionManagement Platform

……….

Fully Committed to Pandemic Prevention to Assume Social Responsibility

87%

88%

89%

90%

91%

92%

Jan Feb Mar Apr May Jun

Strengthened Cost Control, Demonstrated Strong Execution

Identification of and Adaptation to Changes in the Pandemic…

Note: the above data was from the unaudited monthly financial statement of the Group

Cost of Revenue as a % of Revenue in 1H2020*

10

… Post-pandemic Opportunities: New Infrastructure Development and Digital Transformation Acceleration

(1) Source: White paper for “New Infrastructure” Development by CCID Thinktank Information Research Center (赛迪智库电子信息研究所)

New Opportunities Emerge

Pandemic brings changes in customer demand, operation model and people’s lifestyle, as well as accelerating thedigitalization of the society & industries and the development of New Infrastructure

Pandemic stimulates demand for remote working, accelerates enterprises to go online and use of cloud andrelated support

Surging demand for digital operations, digital industries and digital businesses

5G (Data, Transmission)

Artificial Intelligence (Algorithm)

Big Data Center(Storage, Data Service)

Ind

ustrial In

tern

et

Extra-high Voltage Supply Systems

New Energy Vehicle Charging Points

High-speed Railways and Urban Rail

Systems

Seven Key Areas of New Infrastructure

Inte

gration

Inte

gration

Investment Scale of New Infrastructure (1)

New Infrastructure Opportunities

Need for EPC General Contractor of New Digital Infrastructure

(in RMB trillion)

Direct Investment

by 2025

Indirect Investment

by 2025

5G 2.5 >5

Big Data Center1.5

(By 2022)~3.5

(By 2022)

Industrial Internet >0.65 >1

AI 0.22 >0.4

Others … …

Accelerate reform, optimizeorganizational structure andmechanism

Improve dispersed R&D system,increase investment in R&D andecosystem

Enhance professional capabilitiesin general contracting and middleplatform

Positioning – “New Generation Integrated Smart Service Provider”Builder of Digital Infrastructure, Provider of Smart Products and Platforms,

Service Provider of Data Production, Guard of Smart Operation

Impact by Pandemic is Only Temporary

No Change in our Fundamentals and Long-term Prosperity Trend

Turn Crises into Opportunities

More Opportunities than Challenges

Development of 5G & New Infrastructureexpedites, enabling the digitalization oftraditional infrastructure and integrationof new and traditional infrastructure

Operators accelerate transformation anddeployment in New Infrastructure, whichbring opportunities in New Infrastructure(construction of 5G network, IDC… ) andNew Operations (cloud-networkintegration, ICT businesses …)

New technologies such as 5G, IoT and AIdeeply integrate with real economy

Interconnected overseas communicationinfrastructure facilitates digital transformation ofcountries along “Belt and Road”

New Infrastructure expedites building ofsmart society, acceleratesintelligentization of social governance andapplications of people’s livelihood

Future Opportunities

Digital Economy, Digital Transformation

Find the Right Position, Insist on Development with Confidence, Seize New Opportunities

Expedite Value Transformation, Coordinate Deployment and Development on the Three Main Tracks of Development (Domestic Operator, Domestic Non-operator & Overseas Markets)

11

Business Review

1H2019 1H2020 Change % of Revenue

TIS (Telecommunications Infrastructure Services)

Design 5,145 4,757 -7.5% 8.8%

Construction 23,875 22,610 -5.3% 42.0%

Supervision 1,781 1,670 -6.3% 3.1%

Subtotal 30,801 29,037 -5.7% 53.9%

BPO (Business Process Outsourcing Services)

Maintenance 7,349 7,320 -0.4% 13.6%

Property Management 2,711 2,839 4.7% 5.3%

Supply Chain 5,788 4,984 -13.9% 9.2%

Core BPO Businesses Subtotal 15,848 15,143 -4.4% 28.1%

Products Distribution 2,280 1,816 -20.3% 3.4%

Subtotal 18,128 16,959 -6.4% 31.5%

ACO (Applications, Content and Other Services)

System Integration 4,232 4,893 15.6% 9.1%

Software Development & System Support 1,055 1,278 21.1% 2.4%

Value-added Services 957 912 -4.7% 1.7%

Others 876 755 -13.9% 1.4%

Subtotal 7,120 7,838 10.1% 14.6%

Total 56,049 53,834 -4.0% 100%

Business Revenue Breakdown

(RMB’M)

13

14

Revenue Composition

1H2019 1H20201H2018

53.9%

14.6%

28.1%

1H2019 1H20201H2018

Business Structure Continued to Optimize: portion of revenue from ACO business continued

to rise and increased to approximately 15%

Market Structure Further Diversified: portion of revenue from domestic non-operator

further increased and exceeded 40%

3.4%

55.8%

27.4%

11.5%

5.3%

55.0%

12.7%

28.2%

4.1%

36.2%

28.7%

32.3%

2.8%

32.7%

37.6%

2.4%

27.3%

31.9%

2.7%

24.8%

40.6%

ACO

TIS

BPO

Core BPO

Products Distribution Domestic

Non-operator

China Mobile, China Unicom & China Tower

Overseas Customer

Domestic Operator

China Telecom

By Businesses By Markets

Revenue from Domestic Non-operator Market

(RMB’M)

Domestic Non-operator Market

1H2019 1H2020

19,265

1,80021,065

+5.9%

-19.4%

21,8511,450

20,401

1H2018

16,396

+33.3%

-7.6% Products Distribution Revenue

Core Businesses Revenue

14,448

1,948

In which : ACO Business (1)

(RMB’M)

+18.3%+19.2%

3,382

4,032

4,771 Proportion of New Contracts with Size over RMB 100 Million

(per Contract)

FY2019

~8%

1H2020

~14%

1H2019 1H20201H2018

+28.5% +3.7%

Development Quality in Domestic Non-operator Market Further Enhanced

(1) Such data only represents revenues from domestic non-operator market

Focus on the Digitalization Construction Opportunities of Key Industries amid the Development of Digital Economy;

Dedicated to Providing Integrated Comprehensive Smart Solutions

Overcame the pandemic impact and maintained positivegrowth in 1H2020

Our effort to increase R&D investment consistently anddevelop informatization and digitalization constructionprojects are bearing fruit, in which ACO business maintaineda robust growth and was the main revenue growth driver

Achieved continuous breakthroughs in winning large-scaleprojects, in which the proportion of new contracts with sizeover RMB100 million (per contract) increased noticeably

15

Domestic Operator Market

1H2019 1H20201H2018

19,200

16,744

20,030

BPO Business (1)

1H2019 1H20201H2018

11,62510,94610,694

ACO Business (1)

1H2019 1H20201H2018

2,820 2,856

2,226-4.1%-12.8%

+26.6%+1.3%

(1) Such data only represents revenues from domestic operator market

TIS Business (1)

1H2019 1H20201H2018

32,950

18,368

14,582

33,645

15,294

18,351

30,546

13,384

17,162-0.1%

+4.9%

-6.5%

-12.5%

+2.1% -9.2%

Core BPO-5.1%

Core BPO+12.2%

Revenue – By Customers

(RMB’M)

Revenue – By Businesses

(RMB’M)

China Telecom

China Mobile, China Unicom & China Tower

Products Distribution

Core BPO

Maintenance

Facilities Management

Supply Chain

The pandemic affected the overall development in thedomestic operator market, in particular the projectconstruction

Leveraging the new EPC general contracting model, weproactively undertook 5G construction projects with anincreasing business volume

Continuously enhanced “Dual Growth Drivers+” strategy(CAPEX & OPEX + Smart Applications) and penetrated theOPEX businesses while supporting the transformation ofdomestic operators with IT applications, BPO business wasrelatively steady and ACO business sustained growth

16

Overseas Market

Revenue from Overseas Market

(RMB’M)

1,437

1,339

1H2019

+7.3%-7.4%

1,446

1H20201H2018

Key Regions

Overseas New Infrastructure

（5G, Digital Economy...）Maintenance

BusinessData

CentersElectricity+ + +

Transformationand Upgrade

“Go Abroad”PRC Enterprises

Local Gov’t and Enterprises

PRCOperators

LocalOperators

EquipmentVendors

Five Groups of Customers

Traditional Advantages

Revenue from overseas market resumed growth as a result ofthe successful development of major projects which generatedrevenue

Contribution from Asia-Pacific, Southeast Asia and the MiddleEast continued to increase

Acceleration in the interconnection of communicationsinfrastructure facilities has been stimulating the digital economictransformation of countries along the “Belt and Road”

Optimize overseas management, enhance service and risk-prevention capabilities

Four Types of

Businesses

Localization

Focus on key countries in Asia-Pacific, Middle East, and Africa to forge the core regions

Overseas Product Center + Smart Product Middle Platform

17

CAPEX Change of Domestic Operators

-11.6%-15.6%

-11.0%

+4.3%

+11.0%

(2)

Forge the New EPC GeneralContracting Service Model

• Leverage centralized procurementto procure at competitive prices,enhance efficiency and raise corecompetitiveness

• Increase market share toconsolidate leading market position

(1) Source: “White Paper on 5G Economic and Social Impact” issued by China Academy of Information and Communications Technology (CAICT) in 2017(2) Such data is from the disclosure by the three listed domestic operators and China Tower

CAPEX of Domestic Operators Gradually Increase

New Infrastructure Opportunities I - 5G Construction

Explore Cloud-network IntegrationOpportunities

• Capitalize on the trend ofcloudification of 5G network, forgeand promote cloud managementproducts and help operators toconstruct efficient networkmanagement and operation system

• Based on the cloud-networkintegration new blueprint, provide ITsystem development and supportservices

Year

800

700

600

500

400

300

200

100

0

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

(RMB’billion)

From Domestic Operators

From Non-operators(various industries)

5G Relevant Investment (1)

Corresponding Tactics – Domestic Operator Market

Prepare for 5G Construction Growth Period, Support the Transformation of Domestic Operators, Enhance Ecological Cooperation

Strengthen “5G+” Capabilities

• Capture the accelerating trend ofcross-sector integration driven by5G, support domestic operators toconnect with vertical industries

• Provide 5G Network + IndustrialSmart Application Platform

2016 2017 2018 2019 2020

18

Corresponding Tactics – Domestic Non-operator Market

(1) Source: “White Paper on 5G Economic and Social Impact” issued by CAICT in 2017(2) Forecasted by CAICT, in RMB(3) Other industries include SMEs, broadcasting, finance, manufacturing, trading, water conservancy, agriculture etc.

New Infrastructure Opportunities II - 5G: Industrial Applications

CCSOver 30 Solutions Targeting

Different IndustriesNew Contracts Composition

(By Industries)

Gov’t

TransportationConstruction

Internet & IT

1H2020

2020-2025

The pandemic facilitates digital transformation ofsociety and industries

Cloud migration of government and enterprisesaccelerates

Development of Smart City, Smart EmergencyManagement and Network Security expedites

Market Scale and Opportunities in the Next 5Years (2) : 500 billion: investment scale of networking

development by industries and enterprises

>3.5 trillion: 5G network construction will stimulate5G applications along the industry chain and variousindustries

Focus on Key Industries and Provide Customized Integrated Smart Solutions

Other Industries

Smart Gov. Services

Smart Park

Smart Highway

Smart CitySmart

Emergency Mgt

……

Smart Game

Strengthening Middle Platform to Enhance Capabilities Leveraging Ecosystem for Market Development

Electricity

• Establish China Comservice GeneralResearch Institute to coordinate thecore capabilities of middle platforms,and enhance capabilities instrategies, businesses, R&D throughthe middle platforms (R&D platform,Digital platform, Business platform)

• Continue to enhance the capabilitiesof our Cloud platform, IoT platformand Network Security Serviceplatform

Ecosystem Cooperation:

• Enlarge the scope ofecosystem, and enhanceservice capabilities throughdeepening cooperationwith partners

• Focus on the cooperationin technology, products,channels and industry-finance

(3)

800

700

600

500

400

300

200

100

0

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

(RMB’billion)

From Domestic Operators

From Non-operators(various industries)

Year

5G Relevant Investment (1)

Middle Platform (R&D) Capabilities:

19

New Infrastructure Opportunities III – Data Centers

China Comservice:

Construct~ 1 million Racks for Data Centers

Major Constructor

Smart Cloud Integration Integrated Service

Efficient DeploymentTop Qualification and

Multiple Patents

• Major consultation, planning anddesign company and constructor fordata centers in China

• Major Customers: telecom operatorsand third-party IDC service providers(including Internet companies) (1)

• Seamless Connection among VariousProfessional Services

• Supported by the BIM (BuildingInformation Modeling) synergy platform,users could visualize design, synchronizeconstruction, standardize supervision andhave more precise operation andmaintenance, thus realizing a standardizedsystem during project construction

• Possess top industry qualification indesign, construction and supervision

• Engage in the formulation of industrystandards and possess multiple datacenter related patents

• Self-developed technologies (e.g. wind-driven natural cooling technology, lakewater supply technology) help datacenters reduce costs and energyconsumption

Develop EPC general contracting service for data center industry

Develop full-process consultation and BIM applications services for data centers, etc.

Develop data mining, Trusted Cloud Services, etc.

1H2020 New Contract Amount: Doubled and Amounted to >RMB4 Billion

(1) Please refer to Appendix for relevant cases on Data Center construction

General Contracting Procurement Supply

Chain Supervision

Technology Consultation

System & Development

CloudPlatform

SecurityService

Construction & Implementation

Operation &Maintenance

Migration &Integration …….

20

21

New Infrastructure Opportunities IV -Industrial Internet and Other New Infrastructure Opportunities

Industrial Internet (1)

Other New Infrastructure

5G Smart Grid Slicing Management Platform

Government Parks

Enterprises Industries

Chengdu Second Ring Road 5G Smart Public Transportation Dispatch and Management System

(1) Please refer to Appendix for relevant cases on Industrial Internet

• Provide Industrial Internet Big DataPlatform, forge Industrial InternetSecurity Sensing Centers forgovernments in different levels,provide professional support from datato security

• Provide industrial parks with efficientsupport on the supervision, operation andmaintenance for equipment, and alsoenvironment monitoring, security, energyconsumption monitoring, energy saving andemission reduction, etc

• Provide software and hardwareservices covering equipment R&D,construction and modification, systemdevelopment and infrastructureupgrade targeting the diverseenterprise demand

• “1+N” platform system providestechnology support that satisfieddifferentiated demand of various industries

Serve industrial customers from sectorssuch as government, manufacturing andenergy, provide services on IndustrialInternet including consultation andplanning, platform construction, securityand smart applications, etc

Top-level planning and standardformulation: Undertake national standardformulation, deployment and planning onIndustrial Internet, also engage informulation of Industrial Internet solutionsfor key industries

Smart Application Cases that Integrate Advanced Technologies

One of the earliest systems that applied 5G technologies in the country

Applied “5G+AI” technology in public transportation: other than faster Internetaccess, the system enables functions such as traffic flow statistics, efficientsecurity planning, driver behavior analysis and facial recognition

Initiate 5G slicing management features for power industry

For a certain Power Supply Bureau - 5G Smart Grid Application WirelessManagement Platform

• System Features: wireless power adapter management + powercommunication module management + 5G Smart Grid slicingmanagement

Focus on key industries and adopt flexiblecooperation model such as Network+AIapplication integration to partake AInetwork infrastructure construction

Timely capture the new developmentfeatures of extra-high voltage, rail transit,new energy vehicle. Support the digitaltransformation of relevant enterprisesthrough exploring their informatizationdemand

Forge EPC General Contracting Capabilities

Leverage 5G general contracting to forge EPC general contracting capabilities, enhance project value throughbusiness model restructuring

Establish cross-department and cross-profession processes (design, construction, product, procurement,finance and subcontracting), enhance coordination capabilities to form comprehensive management anddelivery capabilities

Forge General Contracting

Core Management Capabilities

• Prepare proposals to facilitateproject launch

Planning • Resources coordination andplanning arrangement

Contract • Combine pre-contractassessment withconstruction and managesubcontractors withstandardized template

Procurement &

Logistics • Coordinate procurement and logistics

planning and consolidate resourcesfrom various channels to lowerprocurement cost

Construction Coordination • Project managers plan and coordinate,

and manage projects withstandardized templates andinformatization measures

Overseas General

Contracting

ICTGeneral

Contracting

IDCGeneral

Contracting

Domestic Operators

5G General Contracting

Dedicated to Be the Largest

New Infrastructure(ICT Area)

Service Provider in the PRC

Consultation

22

Inte

grated

Services

OT (1)

DT (1)

CT (1)

IT (1)

Smart Maintenance

Design Construction Supervision SI Maintenance

4G/5G WiFi Broadband IoT Cloud Resources Network Level

Sensors Chipsets Cameras Scanners …… Perception Level

Security Products Security SI Network Security Security Services

Network Construction

CCS IoT (IoT Platform)

……

CCSYUN （Cloud Platform）

Platforms with Innovative Capabilities

Smart Inspection

Smart Gov. Services

Smart Justice Smart Court Smart Highway

Smart CitySmart Emergency

ManagementSmart Town Smart Park

Intelligent Building

Smart Airport Smart GameSmart Water Conservancy

Smart Enterprise ……

AI

“Big” Smart City

Big Data Cognitive Analysis

VR/AR Blockchain……

Smart Property

Management

Smart Supply Chain

Smart Customer

Service

Smart Transportation

Provider of Smart Products and

Platforms

Guard of Smart Operation

Builder of Digital Infrastructure

Service Provider of

Data Production

Big Data Applications and Services

China Comservice –Blueprint of New Generation Integrated Smart Service Provider

Network SecurityEcosystem Alliance

IoTEcosystem Alliance

Cloud ComputingEcosystem Alliance

Smart CityEcosystem Alliance

Co-build Smart Ecosystem

● Cross-platform ● Cross-connection ● Cross-application ● Cross-region ● Cross-supplier

(1) Represents Operational Technology, Data Technology, Information Technology, and Communications Technology respectively23

Financial Results

1H2019 1H2020 Change % % of Revenue

Revenue 56,049 53,834 -4.0% 100%

Cost of Revenue 49,749 47,931 -3.7% 89.0%

Direct Personnel 4,040 3,670 -9.1% 6.8%

Materials 5,904 6,155 4.2% 11.4%

Direct Cost of Products Distribution

2,175 1,718 -21.0% 3.2%

Subcontracting 31,188 30,126 -3.4% 56.0%

D & A 351 395 12.6% 0.7%

Others 6,091 5,867 -3.7% 10.9%

Gross Profit 6,300 5,903 -6.3% 11.0%

SG & A 4,985 4,785 -4.0% 8.9%

Net Profit 1,712 1,588 -7.2% 2.9%

EPS (RMB) 0.247 0.229 -7.2% -

25

Financial Performance

(RMB’M)

1H20201H2018

Direct Cost of Products Distribution

By proactively controlling the products distributionbusiness, direct cost of products distribution as a %of revenue continued to fall

89.0%

-0.7pp

+0.3pp

+0.1pp

+0.9pp

87.8%

-0.4pp 6.8%

11.4%

56.0%

3.2%

11.6%

7.8%

9.8%

5.0%

54.0%

11.2%

SubcontractingBy strengthening subcontracting management andanalysis to enhance efficiency, growth ofsubcontracting cost as a % of revenue noticeablyeased

Costs Structure

1H2019

Cost of Revenue as a % of Revenue

-1.1pp

+1.7pp

+0.3pp

+0.7pp

-0.6pp

88.8%

7.2%

10.5%

55.7%

3.9%

11.5%

D & A and others

Maintained relatively stable

Achieved Favourable Results in Cost Control as Multiple Measures Were Adopted During the

Pandemic to Alleviate the Impact

Materials

Rapid growth of system integration business indomestic non-operator market drove the increase inmaterials cost

Direct PersonnelBy utilizing subcontracting resources adaptively andcontrolling total staff number, direct personnel costas a % of revenue kept declining

26

9.2% 8.9% 8.9%

SG&A as a % of Revenue

Operating Efficiency

Gross Profit Margin

27

Net Profit Margin

The decline of gross profit margin noticeably moderated:through steadily improving the development quality ofdomestic non-operator market, optimizing businessstructure (rising portion of ACO business) and controllingcosts, we alleviated the impact brought by the pandemicand the decreasing value in domestic operator market

Continued to increase R&D investment, and its portion torevenue kept rising

Net profit margin decreased in 1H2020 mainly due to theimpact of pandemic on business development whilesome costs are relatively fixed in nature (such as labourcost and certain SG&A expenses), and also the costincrease related to pandemic prevention

1H20201H20191H2018

-- -0.2pp

3.1% 3.1%2.9%12.2%

11.2% 11.0%

-1.0pp -0.2pp

1H2018 1H2019 1H2020

-0.3pp --

1H2018 1H2019 1H2020

R&D as a % of Revenue

2.2%2.4%

2.6%

Working Capital

Free Cash Flow (2)

(RMB’M)

28

30.6.201930.6.2018

Accounts Receivable (1) andAccounts Payable Turnover Days

Accounts Receivable (1) andAccounts Payable

(RMB’M)

30.6.2020

30.6.2020

32,156

1H2018 1H2019 1H20202H2018 2H2019

877

2,736

-425

4,668

-1,596

Accounts Receivable Turnover Days

119

151

118

Accounts Payable Turnover Days

139

128

140

31.12.2019

30,675

36,24639,307

Accounts Receivable Accounts Payable

(1) The amount of accounts receivable is the sum of “Accounts and bills receivable, net” and “Contract assets, net” in financial statements. For details, please refer to financial statements(2) Free cash flow = profit for the year + depreciation & amortization – changes in working capital – CAPEX

The pandemic has significant impact on the domestic

macro economy and more pressure is encountered in

cash collection and payment

30.6.2019 31.12.2019 30.6.2020

Total Assets 85,734 87,541 88,224

Total Liabilities 51,921 52,503 53,033

Equity Attributable to Equity Shareholders 33,327 34,564 34,716

Total Liabilities / Total Assets (%) 60.6% 60.0% 60.1%

Debt-to-Capitalization Ratio (%) 1.4% 1.5% 1.8%

Cash and Deposits 15,795 21,692 17,475

Interest-bearing Liabilities 476 511 623

Financial Position

(RMB’M)

The Company’s financial position remains solid and healthy, which enables us to withstand the challengesbrought by the changes in macro-environment, supports the continuous business development andtransformation, as well as providing sound support for the advancement towards high-quality development

29

Thank you!

3rd in the Sell-side Ranking in Telecommunications Sector

• Best CEO

• Best CFO

• Best ESG

3rd in the Overall Ranking in Telecommunications Sector

• Best CEO

--------by Institutional Investor

• Gold Award – Corporate Governance,Social Responsibility and InvestorRelations

• Best CEO

-------- by The Asset

• The Best of Asia - Icon on Corporate Governance

• Asian Corporate Director

--------by Corporate Governance Asia

• Best IR Team

• Best IR Program

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Appendix

Business Revenue Breakdown – By Customer

1H2019 1H2020 Change Change %

TIS (Telecommunications Infrastructure Services)

Domestic Operator 19,200 16,744 -2,456 -12.8%

Domestic Non-operator 10,665 11,185 520 4.9%

Overseas Customer 936 1,108 172 18.3%

TIS total 30,801 29,037 -1,764 -5.7%

Core BPO (Business Process Outsourcing Services)

Domestic Operator 11,156 10,592 -564 -5.1%

Domestic Non-operator 4,568 4,445 -123 -2.7%

Overseas Customer 124 106 -18 -14.0%

Subtotal (Core BPO) 15,848 15,143 -705 -4.4%

Products Distribution 2,280 1,816 -464 -20.3%

BPO Total 18,128 16,959 -1,169 -6.4%

ACO (Applications, Content and Other Services)

Domestic Operator 2,820 2,856 36 1.3%

Domestic Non-operator 4,032 4,771 739 18.3%

Overseas Customer 268 211 -57 -21.5%

ACO total 7,120 7,838 718 10.1%

Total 56,049 53,834 -2,215 -4.0%

(RMB’M)

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Case Illustration - Data Centers

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For Domestic Telecom Operator Data Center Project Phase I in Fuzhou, Fujian

Data center developed in EPCgeneral contracting model

Gross area was ~ 210,000 m2 with18,000 racks

Investment was over RMB100million and phase I constructioncovered 113,000 m2

Data Center EPC Project Phase I & II in Lingang, Shanghai

Gross area was ~ 48,000 m2 with~4,900 racks and investmentexceeding RMB 100 million

Engaged in the full life cycleimplementation by EPC generalcontracting, provided equipmentroom construction and modification,“EPC+ Operation & Maintenance” foran Internet company

Utilized BIM and digitalizationmanagement platform applications

Gross area was ~ 1 million m2 andwas the largest Cloud ComputingData Center in Asia

Project model was Design &Construction / Electrical andMechanical Design + GeneralContracting for Construction

Adopted “air-conditioning with halfenergy consumption” technology,and won the FIDIC Project Awards

For a Large-scale Internet Company Qiandao Lake Data Center

Gross area was ~ 28,000 m2 with2,618 racks planned, was one of thelargest domestic data center withgross area in single unit and powerusage capacity in China

Uses renewable energy (lake water)as the cooling source for air-conditioning system in the datacenter rooms to achieve free-cooling throughout the year.Obtained patent for relevanttechnology

For Domestic Telecom Operator Cloud Computing Center in Inner Mongolia

Case Illustration - Industrial Internet

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Quality Control Platform for a Vehicle Manufacturing Factory

Industrial Internet Big Data Platform in Chongqing

Made use of AIScanner System in the IndustrialQuality Control Smart Platform and utilized 5G tostream high-definition videos

Featured Dedicated Cloud for management,storage and computing which could also increasecapacity in seconds

The Intelligent Video Separation Algorithm basedon AI could perform semantic analysis andefficient retrieval on massive amount of videos,which raised platform efficiency by 60%

Converged city-wide industrial data whichcovered economic data from industries,industrial parks, SMEs and private sector,financial innovation, etc

Applied CCSYUN Cloud Platform to carry 30+industrial application systems in 5 categories(platform inspection, financing, declaration,business and big data application)

CCS IoT Platform provided stable connection forindustrial equipment, connected with >200industrial enterprises and supported multipleforms of connection

Dedicated Cloud Record Search

AIScanner System

5G Network

Smart WearablesVideo Shooting Equipment

The Company would like to caution readers about the forward-looking nature of certainstatements herein. These forward-looking statements are subject to risks, uncertainties andassumptions, which are beyond its control. Potential risks and uncertainties include thoseconcerning, among others, the change of macroeconomic environment, the growth of thetelecommunications industry in China, the development of the regulatory environment, and ourability to successfully execute our business strategies. In addition, these forward-lookingstatements reflect the Company’s current views with respect to future events and are not aguarantee of future performance. The Company does not intend to update these forward-lookingstatements. Actual result may differ materially from the information contained in the forward-looking statements as a result of a number of factors.

Forward-looking Statements

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